The base metals were mostly in the green on Friday. Copper rallied during the pre-dawn hours, sank back below break-even after New York opened, but then rallied again to achieve a rare positive day, finishing at $2.2099/lb., up 9½ cents.

Nickel plunged from over $5 in the pre-dawn hours through to mid-morning, and a subsequent rally left it still with a loss of 15 1/3 cents, at $4.731/lb. Zinc fell below 50 cents early on, but showed great resilience, pushing back to close at $0.5347/lb., up nearly a penny. Aluminum had a modestly positive day, ending up two-thirds of a cent at $0.9743/lb., while lead was sharply higher for a change, adding more than 3½ cents, to $0.652/lb.

Copper led the industrial metals mostly higher as central bankers around the world moved to shore up the financial system.

However, most analysts are not viewing this as a trend reversal.

“The bailout measures, as and when they are announced, will serve to give the markets a little boost,” said Li Junchao, of Shenyin Wanguo Futures Co. in Shanghai. But, “The rebounds will likely be short-lived as commodities are determined by economic growth and supply and demand fundamentals, which cannot be good in a recession.”

Despite the day’s gains, all the metals save for aluminum headed for a week in which they lost ground. Trading has become very short term, with Fridays bringing volatility “as investors close out their positions because few want to hold on to anything over the weekend,” said Wang Pengzhen, of Zhongda Futures Co. in Zhejiang.

Lead, however, was at least one metal reacting to fundamentals, as it raced higher on a big fall in supplies. Inventories monitored by the LME fell by a hefty 1,650 metric tons, to 59,425 tons, the lowest level since May. Of the stock, nearly 20% are on cancelled warrants, not available to the market as they are earmarked for delivery.

In company news, Brazilian mining giant Vale (RIO) cast its vote in favor of a long-term bull market in commodities by allocating a $14.2 billion capex budget for 2009.

“Despite the financial shock and its spillover into the real economy, Vale is still confident of the long-term fundamentals of the minerals and metals markets,” the company said in a statement.

“We have the awareness of the need to be prudent in the face of the risks derived from the financial shock and its adverse feedback loops in the real economy. On the other hand, we do recognize the need to reconcile prudence with the exploitation of value-creating opportunities embodied in the potential for reducing capex costs arising from the current environment, thereby balancing growth with risk mitigation,” Vale said.

Source: Base metals mostly rally -  Optimism not seen as sustainable